Wednesday, May 30, 2012

Ben Shaoul and company put East Fourth Street buildings on the market for $25 million

[Massey Knakal]

Some residents of 118 and 120 E. Fourth St., which went under new management about 18 months ago, knew something was up in their building. One resident reported seeing various men in suits being shown around the building in recent months.

Now we know why. Massey Knakal has just listed 118-122 E. Fourth St.

Here's the listing:

Massey Knakal Realty Services has been retained on an exclusive basis to arrange for the sale of three adjacent walk-up apartment buildings; one 6-story, one 5-story and a 4-story that includes newly added bulkheads to private terraces. The buildings are on two lots with 75’ of frontage, approximately 26,000 gross square feet and 69 units. Located just east of Broadway and the Bowery in one of New York City’s most famous and desirable neighborhoods, the East Village is known for its diverse community, vibrant nightlife, retail diversity & restaurant density, artistic sensibility, and recent gentrification.

The buildings feature 69 apartments split between 47 fair market and 22 rent stabilized units of which there are 31 studios, 34 one-bedrooms, 3 two-bedrooms and 1 three-bedroom. The fair market apartments have been fully gut renovated and feature beautiful dark hardwood floors, dark cabinetry, stainless steel appliances, granite countertops, marble bathrooms, new moldings, and high-end light fixtures.

Current ownership has also completely renovated all of the building’s common areas, installed a coin-operated laundry room, upgraded the electric, repointed the facade wherever necessary, re-paved the courtyard which has beautiful decorative stone that includes a bike rack as well as installed a new intercom system, private roof decks and private backyards in the 118 building. These improvements have dramatically increased the amount of upside to be realized with the building’s 22 remaining regulated units.

If you've been following along at Occupy East Fourth Street, the blog we featured here, then you'll know all about these recent "improvements." The site is full of renovation-demolition horror stories, like this one.

As we understand it, Ben Shaoul's Magnum Management, in partnership with Meadow Partners, bought the buildings in late 2010. Fortune East LLC is the company that manages the buildings.

The asking price for the buildings is $25 million.

Here's the reaction to this news by the blog Living in a Building Managed by Fortune East:

$25,000,000? I wonder if I’ll ever finally get a fucking door that fucking works

According to public records, 118 East 4th LLC bought 118 E. Fourth St. in November 2010 for $4.025 million; 120-122 East 4th, LLC bought 120-122 E. Fourth St. on the same date for $7,475 million... good for $11.5 million total.


Anonymous said...

Why not move if it sucks there? Seems to me that it's a significantly nicer place than before and it seems that since so many people were willing to pay such high rents to move in that others think it's pretty nice too.

Doesn't it seem to most that this is what we want to have happen? A landlord buys broken down buildings and fixes them up? Are people suggesting that we allow fixing up rundown buildings in the EV?

Resident Angel said...

It's about not riding roughshod over long-term tenants to force them out of their rent-regulated apartments so those can be turned-over to students who will accept the new tiny bedrooms and inflated prices that their parents pay for them.

Anonymous said...

We have the most pro-tenant system/courts in the country. What more could you possibly want? If stabilized tenants pay their rent and live in their apartments as their primary residence they get to stay. The days of scamming someone out of their stabilized place in the EV ended 5 to 10 years ago.
Plus, if people want to stay in one apartment for decades then they should buy something - the economics are simple - after 30 years your mortgage payment goes away. Rent stabilized rents never go away and in fact they always go up so why would you chose a stabilized rent over a mortgage?

But if you're like most and don't want to live in one place for decades because you plan to get married or divorced or you plan to have children or you plan for your children to move out or you just like a change of scenery from time to time then find a nice apartment in a nice building and enjoy for a while - and hope that guys like Ben buys buildings in your neighborhood and makes it/them a better place to live.

Laura Goggin Photography said...

"...hope that guys like Ben buys buildings in your neighborhood and makes it/them a better place to live."

Good god.

Anonymous said...

Obviously Ben Shaoul has someone on his payroll to write nice things about him and how he operates, but they must be on some serious mind-altering drugs. Shaoul does not take over buildings and make them nicer places to live, he buys buildings and systematically rips them apart, tearing out the souls of the building and destroying the lives of the people who live there all in the name of profit. This is the same guy who will in two months evict disabled seniors from Cabrini. His process involves harrassment, threats, illegal construction, etc. Do the two people who seem to be such fans ever live in one of his buildings or hear about the woman who had to be taken off the roof of her building by a FDNY bucket-truck because Shaoul illegally removed the staircase in her building with her at home. If there was a fire this woman would have likely raced down the stairs only to either fall two floors or been trapped at the bottom with the fire burning above. How is this improving anything?

Anonymous said...

Funny little aside:

When you click on the "Hospitality" tab on Magnum Real Estate's website, the page just reads, "Coming Soon".

nygrump said...

They'll never get $25 million in this economy - they'll be lucky to get 10% above what they paid. I have spoken to some high level developers and they can't work with Shaoul, very difficult to deal with, shifty as you would expect, but when you are talking millions of dollars, private capital, shifty doesn't work

Anonymous said...

"if people want to stay in one apartment for decades then they should buy something - the economics are simple -"
Yes, simple if you have the money to buy in the first place. I have a rent stabilized apartment and I can't afford to move--let alone buy one that would be any better.

Anonymous said...

Shaoul's buildings are fully rented so clearly plenty of people appreciate what he does.
The myopia of stabilized tenants never ends.

Claire Birmingham said...

Funny how all the pro Shaoul comments are anonymous. I'm Claire Birmingham. I live in 120 and have for ten years. In that time, the building has ALWAYS been in EXCELLENT repair. The hallways were neat and clean and freshly painted. The locks on the doors worked and our garbage was neatly tucked away. Please "anon", show your face and tell me how much better off I am now. You know where I am, come tell me how I should own. You know how to reach me. For the rest of you, you know what's happening to our city.

Resident Angel said...

Even new tenants in Ben Shaoul's Magnum and Fortune East buildings are so sorry they moved into them. And it is not easy to fork up more broker's fees and moving expenses and all the time and effort it takes to change addresses.

These Yelp reviews give quite the picture:

"disgusting...vile...simply horrendous...most poorly run real estate companies...Do NOT make the mistake of living in a magnum rental"...

Anonymous said...

Most of the renovations have been done illegally. In my building he converted two bedroom apartments into four bedroom apartments. Each bedroom can hold one captains bed and they are illegal because there is supposed to be a window in every bedroom to qualify as a bedroom. The ceilings have been lowered and the floor has been raised. All sheetrock and all fixtures are cheap cheap cheap. the hallways are painted brown like shit. they rarely clean and nothing works. Asshole frat boys leave their garbage in the halls.

It would be great if Rosie Mendez got DOB to do an audit on all of the buildings that Shaoul is involved in. She hasn't done anything. I have called in many things and people were actually asked to leave their apartments and they were fined. He is looking to unload all of the buildings now. Heard people talking in the hall.

What were once charming apartments now have low ceiling no light, no moulding, brick, etc.. The intercom doesn't work. People woo hoo all the time. Lousy bad pop music, i don't even know what you would call it. Uninteresting people who think they are cool. Brokers ringing your doorbell at all hours............Oh and the pipes from asshole tenants severely obstruct peoples windows and the apartment that you live in is posted on-line as available even though you are still living there legally. Don't be fooled business owners in any of his buildings are carpetbaggers.

Uncle Waltie said...

Claire B.:
Cockroaches prefer to remain anonymous. They scatter when you shine a light on them.

Anonymous said...

Magnum is currently renovating an apartment in 118 East 4th. The old timers there know the rent was $800. Looking at their "renovation" budget on line and with the vacancy fee they can add on, doing the math says the apartment will remain in Stabilized territory. We will see what kinda rent Magnum asks for. I'm sure it will be inflated to the or beyond the market rate. This is what they have been doing in all the apartments here.

DeSean said...

I have no problem telling you my name is DeSean Peters. I'm a market rate renter who is screwed by rent stabilization. I want to live in a City/building/apartment that is nice and well cared for. It need not be new but it should be manicured. Rent stabilization ruins a landlord's incentive to maintain his property. I couldn't imagine living in the same place for 30 years. I've seen these apartments - they are not in proper condition.

That's why guys like Gluck, Shaoul, et all are great for the City. They come in, kick out the greedy tenants who were cheating the last landlord and renovate the building. Their efforts create thousands of market rate apartments for my friends and me to rent. Why wouldn't we love landlords like this? They keep my rent lower, they make the neighborhoods nicer, they eliminate the scammers, they make the City better.

I know many of you will say that rather than seeking the end of stabiilzation I should seek for stabilization for all. But I hate stabilzation. It's idiotic housing policy. No means testing? Really? Protecting low rents for millionaires? Stabilization forces people to stay in the same apartment for decades even though their family size changes. I don't want to live in the same apartment for more than the next 3 years. And I don't plan on ever living in one place for more than 10 years. That's why I'm a renter and not an owner and that's another reason why stabilization isn't for me.

Landlords have done a great job over the last 10 years fixing up run down properties. NYC housing stock has NEVER been in better condition. I applaud the efforts to improve these buildings and neighborhoods and hope to see a reasonable, compassionate, slow (over a 20 year period) elimination of the stabilization program.

Claire B. said...

Hi DeSean! So, tell us all exactly HOW stabilized tenants are "screwing" you? One of my neighbors heard a realtor telling a prospective tenant that his rent was so high because of the stabilized units left in the building and once they were gone, the rent would go down. DeSean, do you think that's true? Do you really think that a giant equity firm (like Ben Shaoul's partners in my building, Meadow Partners) buys an apartment building in order to make sure fine upstanding young men like yourself have a clean, decent, affordable place to live?

If you re-read my original comment, you will see that the building was in great condition. We had a live in super, who was obsessive about cleaning our sidewalk and keeping the hallways clean. So there goes your incentive driven upkeep argument. My apartment is just fine. It may not be to your liking, but I'd wager there are more than a few market rater who'd be glad to trade with me!

So, really, and please let me get this straight: “guys like Gluck, Shaoul, et all are great for the City” I’m sorry DeSean, I’m afraid you’ve tipped your hand there. We MIGHT have believed you were a naïve young man who bought the whole “you don’t have any rights and you’re being rent gouged, but at least you’re not an “entitled” stabilized leech” schtick, but your comment is just a little TOO fawning. For the record, what is your connection in all this? Anyone else, please go read Yelp!

And HOW exactly am I "cheating" Ben Shaoul? He bought the building knowing that there were stabilized units there. I guess I could use the standard anti-stabilization argument; if you don't want to have to deal with "screwing, cheating" stabilized tenants, then use the free market to buy another building. Problem solved!

Please, can we have one discussion about rent laws in NYC without the tired “millionaires are hoarding affordable apartments” argument. My studio is 12x14. Proper condition or not, you think millionaires are fighting to get in there? Oh wait, I guess they are! But not to actually LIVE there!

I am forced to stay where I am because too many unit have been destabilized. AND, I might add, many were ILLEGALLY destabilized by greedy landlords! I guess to get around these rich and powerful millionaires ensconced in yopur improper, unkempt apartments, you have to go outside the law.

DeSean, you may choose to live for any number of years in one place, that is your choice. I have a LEGAL stabilized apartment. I think I'll stick around. Oh, and I think I'll keep fighting for housing rights for ALL New Yorkers...even the ones who don't think they'll need them.

Claire Birmingham

Anonymous said...

Another point: buying doesn't guaranatee affordability. I grew up in this city. I have friends whose parents bought apartments back in the 70s because they planned to stay--raise families, etc. While the mortgage is paid, the maintenance fees have gone up up up and they are now struggling to afford to stay.

DeSean said...

"DeSean, do you think that's true?"
Yes of course I do - both the Wharton School and MIT have done extensive research on NYC rent stabilization and both concluded that rents would go dow. Do you feel you know the economics of this better than those schools? If so you should write a rebuttal to their papers.

I don't think Shaoul cares about me - nor do I think Whole Foods cares about me - they want my money and know they will get it if they provide me a good product. But what difference does it make if they "care" about me – I don't need my landlord to be my friend I just want a nice place to live.

"So there goes your incentive driven upkeep argument." Are you really suggesting that because one super in the City swept the walks that stabilized apartments are kept up to the same condition as market rate apartments? Do you really think anyone agrees that stabilized apartments are equal in quality to market rate apartments?

"And HOW exactly am I "cheating" Ben Shaoul?" I don't think you are cheating him perhaps I wasn't clear enough in my post - I certainly know there are more than one hundred thousand tenants in the City who are illegally living in a rent stabilized apartment. They are cheating their landlords (not you, you are protected by the law). It's those cheats who Shaoul and others get out when they buy buildings now.

"can we have one discussion about rent laws in NYC without the tired “millionaires are hoarding affordable apartments” argument" No you can't have a discussion without the topic being brought up - it's indefensible to allow millionaires to keep stabilized apartments - the two laws passed this year were passed to only help millionaires - so clearly there are plenty of millionaires with stabilized apartments and the Pols know it – how does RAISING the income limit make any sense? How does RAISING the income limit help anyone in the Bronx? How does RAISING the vacancy deregulation rate from $2,000 to $2,500 help ANYONE in the Bronx. These laws are written to protect millionaires. If no millionaire had a stabilized place then we would make it against the rules and no one would get hurt. But obviously there are enough millionaires in stabilized apartments that the pols pander to them because no rational person would think that it's good housing policy to allow rich people to have $1,000/month rents.

" AND, I might add, many were ILLEGALLY destabilized by greedy landlords!" I certainly agree with this point. It's unfortunate that many landlords broke the law and it's unfortunate that many tenants continue to break the law. I think the cases of landlord abuse are down significantly over the last 5 years or so which is a good thing.
"Oh, and I think I'll keep fighting for housing rights for ALL New Yorkers" Please don't - your attempt to help me has only driven prices higher. Your intentions may be good but your results are obviously negative.

Anonymous said...

The only thing which has driven rent prices higher over the years is nothing but pure greed. To think otherwise is incredibly naive. As Claire noted, a potential landlord has the option to keep walking when considering buying a building with stabilized tenants. If they choose not to look elsewhere, they need to shut up and suck it up; they got exactly what they paid for. Live with it.

Anonymous said...

I know this is an old thread, but If the previous rents are in the $800 range (rent stabilized), and the apartment undergoes renovations, how can the apartment become "market rate"? Doesn't the landlord have to do extensive renovations, on the magnatude of $60,000 plus in order for the unit to become destabilized?